NEW YORK May 7 (Reuters) - Citibank has sold a
$146 million loan it had with the Puerto Rico Electric Power
Authority (PREPA) to a distressed debt investment firm, two
sources said on Thursday, in a sign of the growing
uncertainty over the utility's finances.

PREPA's bank lenders and other bondholders are disputing who
has priority in loan repayments, said one of the sources, who
are familiar with the utility's ongoing, private debt
restructuring talks and requested anonymity.

Citi sold its loan to Solus Alternative Asset Management,
the sources said. Solus replaced Citi in an April 30 forbearance
agreement with PREPA's lenders posted on the website of Puerto
Rico's Government Development Bank (GDB). (here)

A Citi spokesman declined to comment on Thursday. PREPA and
Solus did not return a request for comment.

PREPA is trying to restructure $9 billion in debt, held
largely by bondholders who resist taking any write-down in their
investments, and are pushing for other cost saving measures,
like higher electricity rates.

Citi's $146 million loan was part of a larger credit line of
around $700 million, which PREPA uses to buy oil. Another $525
million is held by a consortium led by Scotiabank. One member of
that consortium, Oriental Bank, put its $200 million portion on
a non-accrual status in April and took a $24 million provision.

The utility is scheduled to make a payment of around $400
million on July 1.
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